Tens of thousands of retirees may be paying more tax on their superannuation due to a lack of guidance on switching to the tax-free retirement phase, according to research released by the Super Members Council (SMC).
Using data collected by specialist research firm Susan Bell Research, the SMC found around 700,000 Australians over 65 who were no longer working full-time still had accumulation accounts. Collectively, they held $90 billion on which those superannuants were paying an average extra tax of $650 a year.
The research found keeping $100,000 in an accumulation account rather than transferring it to a pension account could lead to $4500 more in super taxes over the retirement period, while $200,000 would result in an extra $9000.
Additionally, the SMC noted many people had not shifted into retirement phase because they were disengaged or did not know what to do, with 39 per cent of respondents with less than $100,000 admitting to feeling disengaged and unsure about their options.
SMC chief executive Misha Schubert said not knowing enough about super could lead to seniors making poor decisions, such as leaving accounts inactive or withdrawing funds without proper planning.
The council noted only 17 per cent of Australians, and 26 per cent of current retirees, had sought financial advice from their super funds.
Schubert added the forthcoming Delivering Better Financial Outcomes reforms were crucial for providing low-cost advice to retirees.
“Not knowing enough about super can lead to poor decisions, like leaving accounts inactive or withdrawing funds without proper planning,” she said.
“Making simple information and advice available to more Australians is a big missing piece of the retirement puzzle. The coming financial advice reforms will help make advice more affordable.
“The package of reforms will enable the 2.5 million Australians on the runway to retirement to get the high-quality information they need to plan wisely at a much lower cost and we urge government to introduce legislation swiftly.”